2024 (3) TMI 700 - AT - Customs

Penalty of penalty for abetment of the fraudulent export scheme - Shifting the burden on Customs officials for proper examination of Goods - misdeclaration of quantity and value - charge of committing an act or omitting to commit act - claim for authorization exempting duties under the duty entitlement pass book (DEPB) scheme in the Foreign Trade Policy (FTP) on future imports - HELD THAT - The impugned order has held that the goods having remained, albeit in the containers, in a designated area of the port of export after examination by the officer-noticee, and, though the adjudicating authority shied away from saying so, after the cessation of control over the goods by the appellant, possibility of substitution could not be foreclosed with much the same benefit flowing from shipment of goods of unknown provenance and diminished value as before; that, in any case, is different violation and allegation not incorporated in the show cause notice. With the officer-noticee having been discharged from the allegation of not having conformed to the statutory mandate in section 51 of the Customs Act, 1962, the conformity of the contents of the container, at that point in time, with the declaration is beyond controversy. No evidence has been brought on record that the goods were not substituted after examination which would have been manifested by appeal of Revenue against the dropping of charges against officer-noticee. It would appear that such possibility had not been conjectured and not investigated by the agencies of Revenue and, in the circumstances, is not amenable for refutation of the claim of appellant seeking the benefit from that finding. The show cause notice contains narration of role of appellant in procuring the goods, as found, and of his role in procuring documentation for non-existent goods as well as the greasing of the system to leach the exchequer. These are derived from statements which were not subjected to the rigour of section 138B of Customs Act, 1962. Those may not, therefore, be appropriate grounds for connecting the appellant with misdeclaration or entering goods for export without declaration. The plausibility of goods having conformed to declaration, though found otherwise subsequently, at the time of completion of statutory obligation devolving on the appellant is no longer fiction and, in the absence of refuting thereto with facts, must serve the exporter too. Consequently, we set aside the impugned order and allow the appeal.

Issues Involved:
1. Imposition of penalty under section 114 of the Customs Act, 1962.
2. Confiscation of goods under section 113 of the Customs Act, 1962.
3. Alleged fraudulent export and misdeclaration of goods.
4. Admissibility and credibility of evidence and statements.
5. Denial of cross-examination and principles of natural justice.

Summary:

1. Imposition of Penalty under Section 114:
The appellant, Shri Rajiv Mehta, contended that the penalty imposed under section 114 of the Customs Act, 1962, was based solely on inadmissible statements without any other grounds. The adjudicating authority concluded that Shri Rajiv Mehta, with the assistance of others, engaged in fraudulent export to claim undue export incentives, thus justifying the penalty.

2. Confiscation of Goods under Section 113:
The goods, including men's T-shirts and ladies' dresses, were confiscated under section 113 of the Customs Act, 1962, for incorrect declaration of quantity and value. The adjudicating authority determined the value of the goods to be significantly lower than declared, leading to confiscation.

3. Alleged Fraudulent Export and Misdeclaration:
Investigations revealed that the appellant procured low-quality goods locally and used forged ARE-Is to support the export. The adjudicating authority found that the appellant attempted to export goods with false declarations to claim undue benefits, thereby defrauding the government.

4. Admissibility and Credibility of Evidence and Statements:
The appellant argued that the market enquiries and valuations were conducted without his involvement, violating principles of natural justice. Additionally, the appellant retracted his statements recorded under section 108 of the Customs Act, 1962, claiming they were involuntary. The adjudicating authority did not address these concerns adequately in the impugned order.

5. Denial of Cross-Examination and Principles of Natural Justice:
The appellant's request for cross-examination of key witnesses and individuals involved in the valuation was denied. The tribunal noted that cross-examination is not mandatory but should be considered based on the facts and circumstances of each case. The denial of cross-examination and lack of transparency in market enquiries were highlighted as significant issues.

Conclusion:
The tribunal found that the adjudicating authority's conclusions were based on inadmissible statements and lacked proper consideration of the appellant's arguments regarding market enquiries and retracted statements. The tribunal set aside the impugned order and allowed the appeal, emphasizing the need for adherence to principles of natural justice and proper evaluation of evidence.

(Order pronounced in the open court on 14/03/2024)

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